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Indian Real Estate Sees $41 Bn Domestic Capital Inflows: JLL

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The Indian real estate market is expected to reach USD 1 trillion, fueled by a number of macroeconomic drivers, including sustained GDP growth, growing urbanisation and significant inflows of foreign direct investment (FDI), the report stated

The Indian real estate sector is now looking ready for expansion, with the opportunity to tap into about USD 41 billion in domestic institutional capital, according to JLL’s research. The industry welcomed FDI in 2005. The depth of domestic capital can be shown in the fact that, of all the exits since 2010, 73 per cent were assisted by domestic investors as opposed to 27 per cent by foreign investors.

The Indian real estate market is expected to reach USD 1 trillion, fueled by a number of macroeconomic drivers, including sustained GDP growth, growing urbanisation and significant inflows of foreign direct investment (FDI).

Due to the listing of real estate companies and the three commercial REITs in 2019 and 2020, the inclusion of exit through domestic public market channels began in 2016 as well.

The government has selectively loosened FDI regulations during the past ten years, encouraging more investment and corresponding growth.

With one of the highest levels of commercial and residential space absorption in the past ten years, 2022 was a phenomenal year for real estate. Office and housing markets are on the upswing and that trend is expected to continue through H1 2023.

The real estate market is changing into an organised and structured sector and establishing financial discipline as a result of the relaxation of the FDI policy and other policy reforms like the Real Estate Regulation and Development Act (RERA), Goods and Services Tax (GST), Insolvency and Bankruptcy Code, adoption of REITs, etc.

Due to the listing of real estate companies and the three commercial REITs in 2019 and 2020, the inclusion of exit through domestic public market channels began in 2016 as well.

The government’s recent regulatory measures have led to an increase in the involvement of financial institutions in the real estate market. According to RBI regulations, banks are permitted to invest up to 20 per cent of their net owned funds in equity-linked equities, mutual funds that invest in venture capital and REITs or InvITs.

Private pooled investment funds in India, including real estate, private equity and hedge funds, were made easier by SEBI’s AIF regulations in 2012. In India, the number of AIFs has skyrocketed since 2013. Currently, 23 domestic real estate funds have been announced and are working to raise a total of about USD 3.6 billion for real estate. AIFs are crucial for attracting both institutional and private capital to the domestic capital market.

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Tax Incentives, Flexible Payment Plans Main Factors For Potential Homebuyers: Survey

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Prospective homebuyers are looking for tax incentives and flexible payment plans as well as leaning towards extra benefits provided by developers in light of rising housing costs and rising home loan rates over the previous year, according to survey report titled “Residential Realty Consumer Sentiment Outlook H2 2023 – Trends and Insights”.

Residential real estate that is ready to move into is more in demand than unfinished projects. The poll found that 48 per cent of participants preferred real estate investing, which outperformed other asset classes like stocks, fixed deposits, and gold. According to the research, 15 per cent choose gold, 18 per cent prefer the stock market, and 19 per cent prefer fixed deposits.

“Throughout history, real estate has been a cornerstone of investment. The COVID-19 pandemic has enhanced its relevance, making it the preferred choice for many. Factors such as the emphasis on homeownership, the rise of hybrid work models, and the importance of safety and security have elevated the real estate sector to new heights,” Dhruv Agarwala, Group CEO of Housing, PropTiger and Makaan commented. Flexible payment plans and tax incentives like stamp duty and GST waivers are going to be the main driving forces behind home purchases in the next six months.

The survey revealed that the most sought-after property categories are gated communities and homes that are ready to move into. A buyer’s decision-making process may be influenced by extra benefits like modular kitchens and custom woodwork. Also tailored help is essential for potential purchasers to complete their transactions after narrowing their list of properties.

The online survey, which was performed between January and June 2023, reportedly involved over a thousand potential homebuyers.

Gauri Tandle, CFO, Ashwin Sheth Group

Ashwin Sheth Group Appoints Gauri Tandle as CFO

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The real estate developer Ashwin Sheth Group has appointed Gauri as the Chief Financial Officer (CFO). Gauri has an experience of over 27 years in the real estate business. Before this stint, she was the CFO of Suraj Estate Group. She has also worked with the Bhairav Group, Basar Group of Companies, Essel Group and Prabhat Group of Companies. She has an experience in corporate tasks and M&A spin-offs, loan syndication, complex finance products for real estate companies, and debt syndication.

“We are thrilled to welcome Gauri Tandle as the Chief Financial Officer and her extensive knowledge and significant contributions to several financial transformations positions will help the company to lead our financial growth and strategic financial initiatives”, Ashwin Sheth, Chairman and Managing Director of the Ashwin Sheth Group, commented on the appointment.

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Oberoi Realty Names Pankaj Gupta As CEO – Commercial Real Estate

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Gupta’s focus will be on strengthening client relationships, expanding business and building innovative solutions

Oberoi Realty, a Mumbai-based leading real estate company, has announced the appointment of Pankaj Gupta as Chief Executive Officer, Commercial Real Estate. Gupta will play a key role in formulating the strategy of Oberoi Realty’s commercial business, which presently includes International Business Park that comprises premium commercial spaces including Commerz, Commerz II and Commerz III in Oberoi Garden City, Goregaon, Mumbai, the company said in a statement on Thursday.

With more than two decades of experience in commercial real estate, retail, and hospitality, Pankaj has good expertise in leasing, marketing, facilities and asset management, and SEZ-compliance and certification, the company added. Speaking on the appointment, Vikas Oberoi, CMD, Oberoi Realty Ltd said the company is witnessing growth in commercial real estate due to rising economic activity in the country and the workforce returning to offices after the pandemic. As CEO, Gupta will be responsible for business strategy, leasing, further expansion of our offerings, and revenue management. Our vision is to develop spaces that will redefine the commercial real estate industry in India,” Oberoi said.

Gupta said his focus will be on strengthening client relationships, expanding  business portfolio and building innovative solutions for the company. Oberoi Realty has consistently delivered landmark projects in Mumbai across residential, commercial, retail, hospitality and social infrastructure spaces across the length and breadth of the city, the statement added.

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HDIL’s Six Projects Receive Lenders’ Vote, Four On Liquidation Path

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According to the Insolvency and Bankruptcy Code, a minimum of 66 per cent value of lenders must vote in its favour, for a resolution plan to get approved. A homebuyers’ claims of around Rs 900 crore and Rs 6,895 crore of financial creditors’ claims, has been admitted by the resolution professional

The real estate developer, Housing Development Infrastructure’s (HDIL) lenders voted for separate plans for six projects which includes a plan submitted by Adani Properties, revealed a stock exchange disclosure.

Along with Adani Properties, other for whom the lenders voted in favour of includes Project BKC and Shahad Maharal Lands, however, Dev Land and Housing Pvt Ltd won HDIL Tower.

Apart from this a consortium of Khyati Realtors and Dosti Realty Ltd won three projects being Majestic Towers, Whispering Towers and Premier Kurla, said the exchange notice by HDIL.

According to the Insolvency and Bankruptcy Code, a minimum of 66 per cent value of lenders must vote in its favour, for a resolution plan to get approved.

The plans received for the four verticals were not compliant, a resolution professional (RP) aware of the development informed the stock exchange during last week.

For the liquidation of aforementioned verticals, the RP will be filling with the bankruptcy court. These include Galaxy Apartments, Paradise City, Virar Land and the rest of the company.

Rakesh Kumar Wadhawan and his son Sarang Wadhawan are the promoters of HDIL. They have been accused of an alleged multi-crore scam which led to the collapse of Punjab and Maharashtra Co-operative Bank two years ago. This pulled then under a federal investigation.

A homebuyers’ claims of around Rs 900 crore and Rs 6,895 crore of financial creditors’ claims, has been admitted by the RP.

In February, the resolution process of HDIL had restarted, after a liquidation order pronounced by the National Company Law Tribunal was set aside by the appellate authority. At the time of rejecting the extension, the tribunal said that the lenders had not found a buyer for straight two years.

Following a plea by homebuyers, the National Company Law Appellate Tribunal served an extension. Meanwhile giving an extension, the appellate tribunal observed that the RP had received 25 expressions of interest when it went through a project-wise sale of the company.

corporates cfo

NRIs Show Interest In Real Estate Sector In India

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Career opportunities with higher pay are becoming more popular. The advent of colleges and universities for multinational corporations is flourishing. Most of the time NRIs have shown interest only in luxury homes and holiday properties in India. With the recent and ongoing infrastructure growth, well-connected habitat has helped to fetch the reasonable attention of NRIs.

NRI investment in the real estate market has witnessed an increase. This has expanded the consumer market pool for developers and inspired them to gear up their projects in order to meet global living standards. 

Director, Goel Ganga Developments, Anurag Goel said that the corporate culture is evolving and expanding its origins. Career opportunities with higher pay are becoming more popular. Also, the advent of colleges and universities for multinational corporations is flourishing.

The expansion of these intertwined factors has resulted in a surge in NRI interest to invest and possibly settle in India, he added.

Most of the time NRIs have shown interest only in luxury homes and holiday properties in India.

One of the partners of RPS Group, Suren Goyal said, “The NRI real estate investments have shown up at the time when the Indian real estate market showed slow growth. They poured a strong interest in luxury homes and vacation properties along with the significant proportion of bookings occurring foe the same. This is a favourable indicator for the real estate industry, as in comparison with other investment, it is consistently chosen as an appealing asset enticing greater and more positive returns.”

With the recent and ongoing infrastructure growth, well-connected habitat has helped to fetch the reasonable attention of NRIs.

“In an attempt to establish connections with the domestic land and opportunities to have a similar lifestyle, exchanges with individuals who share a same social and cultural fabric and identity, played an important role in the exceptional growth of NRIs in the real estate sector,” said Ankit Aggarwal, MD, Devika Group.

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Institutional Investments In Real Estate Down 27% At $966 Mn In Apr-Jun

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Institutional investments in Indian real estate fell 27 per cent during the April-June period to USD 966 million amid global economic and geopolitical headwinds, according to JLL India

Institutional investments in Indian real estate fell 27 per cent during the April-June period to USD 966 million amid global economic and geopolitical headwinds, according to JLL India.

The institutional investment in real estate stood at USD 1,329 million in the year-ago period.

As per the data, the institutional investments in the office segment of real estate rose to USD 652 million in April-June 2022 from USD 231 million in the corresponding period of the previous year.

The inflow at entity levels and alternative assets (data centre) stood at USD 110 million and USD 64 million, respectively, in the second quarter of 2022 from nil in the year-ago period.

However, the institutional investments in the housing segment declined to USD 60 million in April-June from USD 78 million a year ago, while the inflow in retail real estate fell to USD 51 million from USD 278 million.

The institutional investment in the warehousing segment declined sharply to USD 29 million in April-June 2022 from USD 742 million in the corresponding period of the previous year.

“The rebound in the office sector with a return-to-office and renewed leasing led to improved investment sentiments as reflected in USD 652 million capital flow during Q2 2022. There was a preference for core assets, indicating an inclination for operational rent-yielding assets,” said Lata Pillai, Head of Capital Market, India, JLL.

Data centres and warehousing remain sectors to watch out for, she said, adding that “we are expecting to see multiple land/portfolio acquisitions and strategic partnerships in the coming quarters”.

In the first half of this year as well, the institutional investments fell 27 per cent to USD 1,909 million from 2,630 million a year ago.

“The expected growth in investments in 2022 was impacted due to global headwinds caused by the geopolitical situation,” JLL India said.

The institutional flow of funds includes investments by family offices, foreign corporate groups, foreign banks, proprietary books, pension funds, private equity, real estate fund-cum-developers, foreign-funded NBFCs and sovereign wealth funds.

It also includes anchor investors in Real estate investment trusts (REITs). The data has been compiled as per available information in the public domain.

The investment period has been captured on the basis of the term sheet signed or transaction announcement and not from the actual transfer of capital.

In its report, JLL India highlighted that the credit flows from the banking sector witnessed sharp growth during the last three and half years.

The real estate sector lending by banks during the first five months of 2022 equals 75 per cent of 2021 levels.

In the January-May period of 2022, the net credit disbursal stood at USD 4 billion.

“The near standstill in the real estate segment during the pandemic was reflected in the sharp decline in net credit disbursal from USD 4 billion in 2019 to USD 1.5 billion in 2020. Construction finance dried up sharply as the project construction was stalled due to the pandemic conditions.

“However, the situation reversed in 2021 with a gradual return to normalcy,” said Samantak Das, chief economist and head of research and REIS, India, JLL.

(PTI)

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I-T dept searches Omaxe group premises in NCR, others

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At least 30 locations in Delhi-NCR and few others in Uttar Pradesh and Punjab are being covered where the tax department officers are looking at company documents and financial transactions primarily related to their real estate business, they said.

The Income Tax department on Monday conducted searches at multiple premises linked to real estate group Omaxe in the national capital region and few other cities on charges of tax evasion, officials said.

At least 30 locations in Delhi-NCR and few others in Uttar Pradesh and Punjab are being covered where the tax department officers are looking at company documents and financial transactions primarily related to their real estate business, they said.

The group could not be reached for comments immediately.

Omaxe is one of the leading real estate developers of Delhi-NCR. It also has significant presence in similar product projects of Punjab, Haryana and Uttar Pradesh.

PTI

financial survey

Positive Sentiment Score In Real Estate Hit Record High In Dec Qtr: Report

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The sentiment index score for India’s real estate sector remained positive and touched an all-time high during October-December quarter

The sentiment index score for India’s real estate sector remained positive and touched an all-time high during October-December quarter, while stakeholders showed “prudent optimism” in their outlook for the next six months amid rising cases of coronavirus, according to a survey report.

As per the Knight Frank-FICCI-NAREDCO Real Estate Sentiment Index report, the ‘Current Sentiment Index’ touched an all-time high of 65 in October-December 2021.

The previous high was a sentiment index score of 63 in Q3 2021.

A score of above 50 indicates ‘Optimism’ in sentiments, a score of 50 means the sentiment is ‘Same’ or ‘Neutral’, while a score below 50 indicates ‘Pessimism’.

The report attributed the improvement in the index to reduced uncertainty on the economic front leading to stability in demand in the real estate sector.

The ‘Future Sentiment Index’ which measures the outlook for the next six months, remained optimistic, but dipped from 72 in Q3 2021 to 60 in Q4 2021, reflecting a prudent optimism as the Omicron-inflicted risk on the Indian economy is yet to be discerned.

The Real Estate Sentiment Index is based on a quarterly survey of key supply-side stakeholders which include developers and financial institutions.

Sanjay Dutt, Joint Chairman FICCI Real Estate Committee and Managing Director & Chief Executive Officer Tata Realty & Infrastructure Ltd said, “2020 and 2021 can be coined as historic years for real estate.”

While the pandemic disrupted the sector globally, it also presented an opportunity to take a step back and put in place building blocks for long-term sustainable growth, he added.

“As we deal with each wave more confidently, I am sure that we are on the cusp of a very exciting and unprecedented cycle of real estate growth,” Dutt said.

Naredco President Rajan Bandelkar said the countries are getting better at dealing with the COVID pandemic.

“We are currently in the third wave of COVID, which has definitely impacted the Future Sentiment score. However, I must add that it still remains in the optimistic zone and is temporary and will inch back up soon,” he added.

Knight Frank India CMD Shishir Baijal said the demand continues to be strong but stakeholders are adopting a cautious approach in the wake of the uncertainty arising from the third wave of COVID-19.

“The real estate sector has demonstrated an indomitable spirit and has remained robust in the last 5 quarters mostly led by the residential sector growth,” Baijal said.

Home loan interest rates are at a historic low and the RBI’s firm assurance in maintaining the status quo has further boosted demand in the market, he added.

(PTI)

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An expansionary Budget for the Real Estate to firm up: Colliers

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The latest economic indicators are hinting towards an urgent need of demand stimulation measures to sustain the economic recovery. The Government should look at ways to boost private consumption and incentivise the real estate sector in the upcoming budget.

The first advance estimates of the government projects India’s GDP to grow at 9.2% in 2021-22 after a steep contraction of 7.3% in FY 21. While the economy is recouping its losses from Covid-19 with encouraging growth across manufacturing, mining, construction and services sectors, the impact and intensity of the third wave continue to be monitorable. The latest economic indicators are hinting towards an urgent need of demand stimulation measures to sustain the economic recovery. The Government should look at ways to boost private consumption and incentivise the real estate sector in the upcoming budget.

The government’s support in the form of liquidity infusion, fiscal support and reform-driven investments was timely to keep the real estate sector amongst others to remain afloat and recover. There is a need for the continuation and introduction of tax sops and incentives to prospective homebuyers, investors, and developers at large.

Colliers’ experts expect the below from the Budget 2022

· “Budget 2022 should continue to focus on expansionary policy measures to boost consumer spending and investment. Measures to boost affordable and mid-income housing in the form of extension and expansion of tax benefit for first-time home buyers, sops for developers engaged in affordable housing & rental housing projects will have a positive domino effect on the real estate sector and the overall economy. In line with India’s ‘net zero’ targets, the Budget should lay a road map for ensuring sustainable real estate development through financial & non-financial incentives.” – Ramesh Nair, CEO, India and Managing Director, Market Development, Asia, Colliers.

· “While the real estate sector is looking at a robust housing demand revival in 2022, it is expected that the Union Budget 2022 will play a supportive and enabling role. The demand for bigger housing loans has increased and the expectation is that tax exemption should be relooked to Rs. 5 lacs. Additionally, a GST waiver for under-construction properties, and incentives for private investment in the affordable housing sector will be encouraging, while tax exemptions for notified rental housing projects will accelerate the pace of investments in this scheme and help in achieving “Housing for All” objectives too. The real estate sector’s long-standing demand to widen the definition of affordable housing to include houses priced more than Rs 45 lakhs in big metro cities is expected” – Piyush Gupta, Managing Director, Capital Markets and Investment Services, Colliers India.

· “Industry status for the real estate sector will help the sector to access cheaper funding. After a resounding year of the residential sector, the developers’ community would hope for liquidity infusion, particularly for incomplete projects. It will also be important to introduce tax incentives to promote rental housing of which Student Housing and Senior Community Living are also a part. We expect a push for rental housing, it will be interesting to watch if 80IBA exemptions are reintroduced. The industry would also expect certain policy directives to bring more FDIs into the sector through Tax rationalization” – Subhankar Mitra, Managing Director, Advisory Services, Colliers India.

· “Real estate sector witnessed a period of recovery which is likely to be derailed by the current pandemic wave. Tax concessionary benefits pertaining to affordable housing, increasing tax set-off for housing loan interest payment under sections 24, 80EE and specifically increasing the standard deduction which could increase the cash available through savings for taxpayers. These combined with more specific curative measures like long-term capital gains period be reduced for REITs and increase the total deduction available under 80C where the home loan principal repayment deduction is allowed, will increase investment into real estate. The Budget should relook at the capital gains taxation of the profits arising from the transfer of shares (held as an investment) in entities holding immovable assets especially in M&A where sick units with assets are being taken over either from insolvency or SARFESI based resolutions. This could free capital for entities in the real estate business which could be reinvested for newer ventures and promote the growth of the sector” – Ajay Sharma, Managing Director, Valuation Services, Colliers India.

· “Real estate is one of the key pillars of the economy and has shown complete resilience during the pandemic. However, the warehousing sector has been dented by growing input costs due to the price increase in raw materials such as cement, steel, etc. Raw material prices are increasing by the day and it is hurting the growing sector. To give the development a boost a move to reduce GST rates for construction materials can give a lot of relief to the warehouse developers and will directly help to give a much-needed thrust to the sector” – Shyam Arumugam, Managing Director, Industrial and Logistics Services, Colliers India.

While the real estate sector has gained most of the lost ground, most of the segments especially housing, the commercial office continue to trail below the pre-Covid levels. Real Estate will play a key role in Budget 2022 that will help the developers, economic recovery and job creation.

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